Agribusiness set to boom in Africa, says DHL

Published: 18 December 2013

It is no secret that Africa is on the rise and increasingly offering lucrative opportunities to local businesses due to the continent's steady economic growth, increased disposable income and high consumer confidence.

Charles Brewer, Managing Director of DHL Express Sub-Saharan Africa, says that one particular sector which has seen significant growth in Africa is agribusiness, which entails the full value chain from agricultural production/farming through secondary processing, distribution and retailing to the end user/consumer (farm-to-fork concept). "The retail sector is booming in Africa, as is the rapid growth of populations and the African middle class. As a result of this expansion, there is a greater availability of and demand for good quality agricultural produce and processed food products than ever before."

He points to the recent report by World Bank - Growing Africa: Unlocking the Potential of Agribusiness – which revealed that Africa's farmers and agribusinesses could create a trillion-dollar food market by 2030 – a three-fold increase from the current size of the market which is estimated to be worth $313 billion.

"This expected growth highlights the growing market and many opportunities for South African agribusiness and related value chain role players to expand into Africa," says Brewer.

According to Hennie van der Merwe, CEO of the Agribusiness Development Corporation (ADC), based in South Africa, Africa provides a new market for agribusiness firms.

"Given its increased spending power, demand for goods and untapped land resources, Africa is currently experiencing a revival in terms of its focus on agribusiness, not only to increase food self-sufficiency, but also to create jobs and economic activity, specifically in rural areas," says van der Merwe.

"In the current climate, Africa is increasingly offering greater growth forecasts," he notes. However, he explains that while Africa is well-endowed with resources, it often lacks much of the necessary expertise to unlock the commercial potential of its agriculture resources, whereas South Africa is well regarded for its expertise in commercial farming and agribusiness.

"One of the major limitations on agribusiness development in Africa is a human capacity and human skills constraint. The ability and experience to develop and manage commercial farming and agribusiness ventures are largely lacking in the African environment and that major technology transfer and capacity building would be necessary in this regard."

Van der Merwe says this is where the opportunity lies for local businesses and farmers to expand beyond their borders and offer expertise in neighbouring countries.

Van der Merwe adds that it is vital to have partnerships in place before venturing into projects in Africa. "Partnerships with a local business or association in the specific country are necessary as business owners need to be provided with assistance, guidance and sometimes protection when in the area. It is also essential/indispensable to ensure that all the building blocks for working value chains are in place to ensure and support successful operation. A local partnership will also assist with analysing the market carefully to evaluate what the real market needs, requirements and opportunities are."

"The market in Africa is there and ready, but the question is how local businesses create a direct link to service the market needs," concludes Brewer.